Customer Relationship Management

and Customer Retention in the

Amica Restaurant at Valmet Oy Ltd.
Nischal CK

Bachelor’s thesis
November 2015
School of Service and Business Management
Degree Programme in Facility Management
 Description

Author(s) Type of publication Date:

Nischal CK Bachelor’s Thesis 16.11.2015
Language of publication:
English
Pages Permission for web pub-
47 lication: x
Title of publication
Customer Relationship Management and Customer Retention in the Amica Restau-
rant at Valmet Oy Ltd.
Degree Programme
Degree Programme in Facility Management

Tutor(s)
Aho Kimmo

Assigned by
Amica Restaurant, Valmet Oy Ltd.

Abstract
The aim of the thesis was to increase the understanding of customer retention by investigat-
ing a service company able to improve their customer retention through customer relation-
ship management. Companies may choose to apply different parts of customer relationship
management to their businesses through technology and other means of communication
with their customers, various training programs and other resources devoted towards the
employees of the company. Evaluating the past and present behaviour makes it possible for
the company to adopt the most effective business strategy.
A qualitative and semi-structured research method was adopted in order to explore the rela-
tionships between the service providing company and their customers to promote their cus-
tomer retention strategy. The results of the research indicate that to be able to attract and
keep customers by increasing the customer retention rate, companies have adopted a proac-
tive approach devoting time and resources to stay in touch with their customers. This way
companies not only can increase their competitive advantage but can also develop a sense
of seeking benefits not just for the company but also for their customers.
The conclusions are that companies have to realize that they have to do things right by lis-
tening to their customers and adopting a strategy based on mutual agreement with the cus-
tomers. The company has a better chance to overcome their competitors and be more effi-
cient in building relationships with their customers by promoting customer retention.
Keywords/tags
customer relationship management, customer retention, relationship marketing

Miscellaneous:
 1

Contents
1 Introduction ............................................................................................................ 3

1.1 Background ...................................................................................................... 3

1.2 Research Objective and Research Questions ................................................... 3

1.3 Research Problem ............................................................................................ 4

1.4 Research Limitation ......................................................................................... 4

2 Amica restaurant Oy as a case company ................................................................ 5

3 The customer as a focal point ................................................................................. 7

3.1 Marketing......................................................................................................... 7

3.2 Customer Relationship Management ............................................................... 8

3.3 Components of customer relationship management ........................................ 9

3.4 The goal of customer relationship management ............................................ 13

3.5 Benefits of customer relationship management ............................................. 14

3.6 Customer retention......................................................................................... 15

3.7 Advantages of customer retention strategy.................................................... 16

3.8 Factors of customer retention profitability .................................................... 16

3.9 Customer retention as a key to business performance ................................... 23

3.10 Creating Trust to build customer retention ................................................ 24

3.11 Impact of life time value customer on customer retention......................... 24

3.12 Key performance indicators of customer retention programmes ............... 25

4 Methods and materials.......................................................................................... 27

4.1 Data collection ............................................................................................... 27

4.2 Qualitative research ....................................................................................... 28

4.3 Interviews ...................................................................................................... 29

4.4 Data Analysis ................................................................................................. 30

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4.5 Reliability and Validity.................................................................................. 33

5 Findings ................................................................................................................ 35

6 Discussion ............................................................................................................ 37

6.1 Research Results ............................................................................................ 37

6.2 Research Analysis.......................................................................................... 37

6.3 Reflections on the Research........................................................................... 39

6.4 Reliability and Validity.................................................................................. 39

7 Conclusion ............................................................................................................ 41

7.1 Suggestions for further studies ...................................................................... 42

References .................................................................................................................... 43

Appendices ................................................................................................................... 46

Appendix 1: Interview questions.............................................................................. 46

Appendix 2: Interview questions.............................................................................. 46

Appendix 3: Interview request send to participants via e-mail ................................ 47

Figures

Figure 1: Net sales & Net Business area ....................................................................... 5

Figure 2: Brands of Fazer .............................................................................................. 6
Figure 3: Mission, vision and values of fazer ............................................................... 6
Figure 4: The CRM Value Chain ................................................................................ 14
Figure 5: Credit Card Company .................................................................................. 17
Figure 6: Garage Company ......................................................................................... 17
Figure 7: Tools of customer commitment ................................................................... 19
Figure 8: Comparison of customer cards .................................................................... 21
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1 Introduction

This chapter starts with the research background in order to sum up the situation for
the reader. This is then followed by the research objectives and research questions that
will end with an overall purpose of the study. Then a specific research problem and a
research limitation are introduced.

1.1 Background

It is already more than two decades since customer relationship management began to
attract attention in developing relations between customers and organisations. Today’s
customers are significant factors in the company management with the power to
change cooperate short term and long-term strategies. Conquering markets and
achieving market leadership was no longer a company`s primary concern. Instead, ac-
tivities within the organization had to be coordinated to ensure that they contributed to
the development of mutually profitable relationships with the right customers. During
the 1990s, people became more aware of the development of buyer-seller relations
and realized that the relations had consequences for the entire organisations (Peelen
2005, 4-5).

Many companies are increasingly adopting customer relationship management as

means to take their competitive advantages. The firms are under a tremendous pres-
sure to adjust quickly to rapid changes in a marketplace with re-goods to customer,
technology and market function. Customers are not only becoming more value con-
scious but also less loyal and less service level oriented and less tolerant. Conse-
quently, markets are becoming more fragmented, making differentiation more difficult
and completion instant. This change is driving companies to become customer centric
and shifting their marketing function from product based to customer based. (Kumar
2012, 2.)

1.2 Research Objective and Research Questions

The objective of the current thesis study is to investigate the factors that could poten-
tially increase the understanding of service providing companies and customers in or-
der to improve customer retention. The main research questions are as follows:
 4

1) What are the advantages of customer relationship management?

2) How can the company get advantage from using a retention strategy?
3) How can a company apply customer retention strategy as the key to their busi-
ness performance?

1.3 Research Problem

An organization without customer relationship management, will suffer from a serious
competitive disadvantage. They will lose the competitive edge that the knowledge of
customers and a better understanding of customer needs can give them while antici-
pating and adapting to relationship marketing developments. A company which fails
to implement a customer relationship management system in time will be slow to im-
prove customer service, and service innovations that depend on investment in call cen-
tres, data warehousing or e-commerce may not be implemented in time to recover
from the situation (Baran & Galka 2013, 29). A specific target is to find out about the
relationship between a service providing cooperation and their customers in which a
company develops the realtionship in order to improve customer retention.

1.4 Research Limitation

The present study will focus especially on customer retention aspects as customer re-
lationship management is a multidisciplinary field. Emphasis will be given from the
cooperate perspective. The interviews were conducted via e-mail due to the busy
schedules of the interviewee, despite having the acknowledgement of the limitation of
the answers received by e-mail in terms of interpretation. An answer received by e-
mail provides the author possibility to respond to the answer by email and ask further
questions. The author noted some limitations on semi-structured interviews via e-mail.
Although the semi-structured interview questions, planned in advanced, gave mean-
ingful results some of the answers received were slightly narrow and gave little infor-
mation.
 5

2 Amica restaurant Oy as a case company

Amica is the staff restaurant in Valmet Oy, located in the city of Jyväskylä with a lim-
ited access. Amica has three restaurants in the Valmet area, which provides a variety
of foods for different customers, catering service for staffs of Valmet employees and
take away food service offers for outside customers by ordering food online. (Amica
2015.)

Amica is a branch of Fazer food service. It is the leading contract-catering brand in

the Nordic region, offering delicious food for customers and adapt service solution.
Services include private and public sector, personnel restaurant, student restaurant,
cafe-restaurant, conference restaurant and meeting venues as well as food services for
schools and public service organizations. Fazer food service provides catering services
for special occasions. Fazer restaurant business was established in 1891 when Karl
Fazer founded, and started the first French café in Helsinki. Today Fazer continues to
expand its leading brands in different markets and in new product and service catego-
ries. Fazer has over 15,500 employees and its main headquarters in Finland with oper-
ations in Sweden, Norway, Denmark, Russia and Baltic countries. (Fazer, 2015.)

Figure 1. Net sales & Net Business area (Fazer, 2015)

The above figure 1, shows that the operating profit in 2013. Fazer group`s net sales
grew to 1.7 billion euros of all time high and over 50% of the revenue comes from
 6

outside the Finland. The profit was 49 M euro excluding repayment of goodwill. The
operation profit in 2013 was 49 M euro (83 million euro excluding repayment of
goodwill).

Figure 2. Brands of Fazer (Fazer, 2015)

Figure 3. Mission, vision and values of fazer (Fazer, 2015).

In the figure 2 shows, that Amica is the one of the brand of Fazer food services. Offer-
ing food and café service.
 7

3 The customer as a focal point

3.1 Marketing
Marketing is a continuous and persistence process, implementation and follow-up.
Marketing plays a key role in business planning in different ways. Customer value is
the key integrant in the marketing formula for success. The broad purpose of market-
ing is to bring a firm’s products for money; the purpose of personal marketing is to
bring the right products into contact with the right customers, and to make certain that
ownership transfers take place. Each company must find the game plan for a long-
term survival, and growth that makes the most sense given its specific situation oppor-
tunities, objectives and resources. (Kotler, Armstrong, Harris & Piercy 2013, 38-47.)

According to Patel (2007), defined by T.F. Stroh, marketingmanship is one of the

skills used in personal marketing; it is a direct, face-to-face, marketing-to-buyer influ-
ence, which can communicate the facts necessary for making a buying decision; or it,
can utilize the psychology of influence to encourage the formation of a buying deci-
sion. The marketing-person of today has to react and interact in many different ways
to many different people. Marketingmanship may be implemented not only through
personal marketing but also through advertising. Modern advertising is planned with
motivation or influence as the objective. (Patel 2007, 124.)

Bruhn (2003, 10) states that Parvatiyar and Sheth (2000) define relationship marketing
as the ongoing process of engaging in cooperation and collaborative activities and
programs with immediate and end-user customers to create or enhance mutual eco-
nomic values at a reduced cost. The discipline of marketing has emerged over many
decades. Early marketing thinking primarily focused on the efficiency of marketing
channels. It is important for an emerging disciple to develop an acceptable definition
that encompasses all features of the phenomenon and effective de-limits the domain. It
is reasonable to limit the domain of relationship marketing to only those actions that
are focused on serving the needs of customers. However, to achieve a mutually bene-
ficial relationship with the customers, corporate management may need to consider
other organizational relationship, i.e. with suppliers, competitors or internal divisions.
(Bruhn 2003, 11.)
 8

3.2 Customer Relationship Management

CRM stands for customer relationship management that is a marketing approach
providing satisfaction of customer needs at every point of interaction between the cus-
tomer and the cooperation (Kotler & Keller 2012, 2011). Customer is not just about
installing software or automating customer touch points. It is about the reinvention of
our enterprises around the customer and becoming customer-centric (Saunders, Wong,
Kotler, & Armstrong 2001, 409-410.) In Parvatiyar and sheth`s view (2000, 6),

“Customer Relationship Management is a comprehenshive strategy and process of

acquring, retaining and partnering with the selective customer to create superior
value for the company and the customer.”

Customer relationship management has become important for the business with the
new marketing approach to adapt their business activities to reach towards their
customers and build the strong relationships, networks and interactions with
customers. Customer relationship management has different market approaches,
customer market, the referral market, consisting of customers who have been referred
to the business by word of mouth, the supplier market,the recuitment markets,the
influnecer market and the internal market comprising an organization`s own
employees. The marketing approach of customer relationship management has gained
much currency in the recent years by attempting to build closer relationships and
interactions between a business and its most important customers. Customer
relationship management focused on businesses marketing their products and services
through relationships and interactions with customer market , often taking advantage
of IT-based interactivity. (Emerald 2005, 136-139).

Baran & Galka ( 2013 13-15) reveal that customer relationship management is a pro-
tective marketing strategy that focuses on managing the customer experience by un-
derstanding their needs and purchase behaviour. It is an efficient way to strength the
relationship between a company and its customer, transforming links into friends and
partners. This is done by building learning relationships, for example through super-
market identification cards and loyalty programs. Customer relationship management
implements a customer focus that enables an organization to retain loyal customers
 9

and a greater share of the customer’s wallet through cross selling and up selling. The
organization must master multichannel marketing and managing touch points to im-
plement it effectively. The structural design of customer relationship management
consists of an integrated front office, business intelligence system (data ware houses,
data marts and data mining), and business rules that transmit business intelligence to
front-office personnel, physical links to back office systems such as inventory control,
accounts receivable, and performance metrics.

3.3 Components of customer relationship management

Customer loyalty

Rogers & Peppers (2004 ), describes that customer loyalty can be approached into two
directions attitudinal (emotional) and behavioral (functional). The attitudinal defini-
tion of loyalty suggest that loyalty is a state of mind whereas behavioral loyalty means
that someone is willing to pay a premium for brand x over brand y even without favor
to the attitudes that underlie that conduct. Behavior customer loyalty is not the cause,
but the results of preference. A company focusing on different tactics to increase cus-
tomer loyalty in fact increase the amount of repurchase behavior strategy that can eas-
ily include, raising consumer`s general choices for the brand or customer level of sat-
isfaction with it. Behavioral customer loyalty is simply more useful and practical be-
cause when customer is loyal then customer is a repeat purchaser, plain and simple.
Customer loyalty should have as direct connection as possible to a company`s finan-
cial and operational profits results. The lifetime value will capture all the various be-
havior and activities of the customer that have relationship with the enterprise`s profit
from loyalty customers (Rogers, 2004, 56-59).

Customer relationship

Customer is someone with whom we exchange value. With better service provided to
the customer in return strong relationship bond will create between the company and
customers. For example, Customer who orders books via internet from an online
bookstore may afterwards contact the supplier by telephone to obtain additional infor-
mation. Due the recorded of the data in the computer system the operator can see that
 10

the purchase has been completed, as well as having access to the additional infor-
mation on the delivery, product and payment. In this way the customer does not have
to provide their entire contact history. The dialogue may proceed without the obstacles
because the delivery channels have been connected with one another. Customer rela-
tionship management is a process that addresses all aspects of identifying customers
chance to create customer knowledge, building customer bonds and shaping their per-
ceptions of the organization and its products. Customer relationship is the one pro-
vided at the turn of the century, has adapted the concept of real-time marketing for
various purposes. Customer relationship targets towards the building of an infrastruc-
ture, which may be used to develop long-term customer supplier relationship. As a re-
sults of infrastructure the walls between company and customer torn down. Whereas it
was once impossible to enter the other`s domain at one`s own convince, now a days it
is a great easier deal. On the other hand customer are able to look into the records to
determine whether a specific products is in stock, track the status of delivery and ana-
lysed other buyer opinions on the product. The buyer maybe involved as lead user in
the development of new products and share confidential information. Customer can
obtain access to areas of the company which were previously hidden and which could
only be entered or accessed under supervision and by appointment. As viewed from
the other side it becomes much easier for suppliers to gather information from custom-
ers and contact them. The customer and supplier activities are integrated. The privacy
of the both may easily be violate and both will have to consider carefully what is and
what is not desirable in this part. In real time, it will be possible to provide to one an-
other wishes quickly. (Beltman, 2013, 33-43)

Customer service

“Great service is about attitude. And a service attitude leads to a richer quality of life,
not only in the commercial sector” (Leonard Berry).

Customer service is one of the important component of customer relationship manage-

ment. Companies only know the strength and drawbacks with the results of provided
customer services. Different service company promote the mantra TLC; think like
customer while designing their service interactions. Due to mishandling on how cus-
tomer think, many service company results miss opportunities to become truly excel-
 11

lent. Understanding customer psychology at a deeper level can help company to pro-
vide excellent services. Actually while most of the service company addresses the ob-
vious things that affects customer’s psychological attitude towards the service such as
responsiveness on the part of their employees. Through combination of market de-
mand and creative development of service the developed world`s economics are ruled
by service firms. A service encounter consists of a customer interacting with an organ-
ization for the purpose of achieving certain goal. The customer service interaction can
be either face to face to through telecommunications. Single interaction or multiple in-
teraction. To improve such encounters and solve varieties of problem arose, it need to
do what other science does, establish operational definition that permit focused analy-
sis of cause and effects. The service encounter can be operationally define as three T
so; task to be done, treatment accorded to customer and the tangible features of the
service. For example the service provided by the restaurant, better service can be ana-
lyzed whether food was cooked well (task), was the food tasty (treatment) and was the
restaurant area clean and pleasant (tangible) through this service encounters the com-
pany can provide effective customer service to improve the weakness and customer
satisfaction (Chase 2013, 6-9.)

Loyalty Programs

Customer loyalty program seek to set customers bond to a company by offering addi-
tional encouragements. In a small business informal loyalty programmers may take in
from of giving treat as a way of thanking to a regular customers periodically. Consum-
ers are loyal to several brand while rejecting others, sometimes describes as polyga-
mous loyalty. In such instant the marketing goal becomes one of the strengthening the
customer preference for brand x over brand y. Marketers need to check three psycho-
logical effects to assess the potential of loyalty programme to alter patterns of behav-
ior; brand loyalty verses deal loyalty where marketer should focus on loyalty pro-
grammers that directly supports the value of the product instead of creating difference
between brand loyalty versus deal loyalty, several elements combine to determine a
loyalty programs to value customer should anlaysed and marketers should focus on
solution to send customer indicating progress towards reaching particular milestone
and promoting the rewards that might be forth coming when that point is reach on
time. Customer loyalty programs reinforce loyalty by rewarding frequent users. By
 12

encouraging the frequent users a core of profitable customer companies initiate a spi-
ral of economics advantages which enables companies to compensate employee more
generously, provides investors with super cash flow and reinvest more aggressively to
further enhance the value delivered to customers. (Christoper Lovelock 2002, 133-
143).

Customer driven Brand

Brand is the type of product produce by the company to its customers. The importance
of listening to the customer has, been one of the marketers mantra. Although the
concept may work in the some companies or with some products, the fact is that more
and more custumer decisions are being made by chhannel customers or patner rather
than by customers themselves. For example, Mcdonalds serves cocacola, not pepsi, in
its restaurants. Similarly ,Wal-mart customer looking for whirlpool appliances will be
dissapointed; because the retailer no longer carries that brand. McDonald`s and Wal-
mart are major brands themseleves, each focus enormous marketing efforts directed at
customers. But those consumors are increasingly restricted to making decisions in
effects already made by others. Todays brand experiences from consumers point of
views encompass business to business relationships further back on the production
and distrubiton side. The business to business relationships are the critical in building
sustaining brand value in the business to customer ground. (Freeland 2003, 30-33. )

Gaining customer Insight

The past customer relationship management companies lack the element of customer
insight that the ability to understand customer need and accuretely predict customer
behaviour. But these elements has become more critical as the customer have become
more mobile, more changeable, and demanding. Companies must have all the
capability required to capture and analyze critical custome data and analyze that data
to create deep insight into the customer behave, how they would like to intreact with
the company and what they turely want and need from the company. However, critical
customer insight should determine how company interacts with customers in the
future to provide suitable offers and services for gaining customer insight. (Freeland
2003, 8. )
 13

3.4 The goal of customer relationship management

The aim of customer relationship management is to develop mutual relationships that
are more profitable with customers. Some companies do this taking cost out of the re-
lationship, e.g. by shifting customers to web-based self-service, and some increase the
revenue by selling customers additional products and services. Most companies adapt
both the approaches. The not for profit context would work towards different cus-
tomer relationship management objectives, such as operational efficiency or increased
client satisfaction. Measuring customer profitability suggests that an organization
must be able to trace their incomes and costs to customers, either at a segmental or an
individual level. Most business-to business (B2B) companies can trace their incomes
to customers. The invoicing databases contain these data. Fewer B2B companies can
trace their costs to customers, for example,the costs of customer acquisition and ser-
vice. In business to consumer (B2C), customer relationship management implementa-
tions, costs and revenues are assigned at a segment level, because there are many
more customers. (Buttle 2004, 39-50. )

In figure 4 the customer relationship value chain, the value chain model provides a
helicopter view, giving an overview of the customer relationship management land-
scape. The value chain has a five-step process for developing and implementing cus-
tomer relationship strategy. The five primary steps are performed with the deployment
of several tools and processes. The other steps identify a number of supporting condi-
tions that facilitate a successful implementation.
 14

Figure 4. The customer relationship management value chain (Source: Buttle 2004,
40)

3.5 Benefits of customer relationship management

The reasons that companies have adopted customer relationship management because
it can improve productivity across the perfect range of key marketing functions: de-
tecting prospects, acquiring customers, developing customers through cross selling
and up selling, managing customer migration, serving, retaining, and increasing cus-
tomer loyalty and win back defectors. Many organizations have realised the benefits
of customer relationship management as retaining and pleasing the right kind of cus-
tomers, gaining repeatedly purchasing customers and increasing profitability. (Baran
& Galka 2013, 9-15. ) CRM is a technology or software that helps track data and in-
formation about the customers to enable better service. Customer relationship man-
agement help to acquire profitable customers, to be focus on enterprise customers as a
key to competitive advantage. It helps to retain profitable customers longer, win back
profitable customers and eliminate unprofitable customers. Companies can upsell ad-
ditional products in a solution, cross sell other products to customers, referrals and
word of mouth benefits and reduce service and operational cost (Rogers 2004. 307).
 15

3.6 Customer retention

Customer retention has been defined in many ways definitions often explain the
length and breadth of the subject area, thereby adding value in understanding the na-
ture of the field in totality. In Peelen`s view (2005, 162-163), customer retention as:

“Customer retention in a marketing sense means holding on to customers. If a com-

pany becomes aware in time of those customers who demonstrate an increased likeli-
hood of ending the relationship, then it can take action to prevent this.”

Customer retention is a system of activities for improving the transaction process,

based on the positive positioning of the customer, and the consequential readiness for
successive purchasing. Retention strategies work best when company retention level is
high because only a small 5 percent increase in retention can increase company profit-
ability to over 85 percent. Retention strategies are profitable not only because of in-
creased revenue from loyal customers but also, because of reduced costs of serving
long-time customers. The two possibility can be differentiated from the customer
point of view with concern to customer satisfaction, loyalty and constrained (Bliemel
1998, 37-44).

Loyalty customers are voluntary commitment, that customer have the opportunities to
change the company anytime. Customer’s economic and emotional reasons should be
taken into consideration. Customer satisfaction is more importance and have to give
highest priority in emotional reasons, because customer will only remain loyal under a
company`s existing conditions, if they are so satisfied with the company that they do
not want to change. A constrained is the situation where customer have no actual or
legal opportunity to change their provider, or if this can only be done with the great
difficulty or a great expense. They are involuntary bound to a company. Example in
oligarchical political situations or in monopolies, but can also come about through
contracts or via compatibility standards. Citizens of many countries in the world can
relate to the concept of having much choice in the way of political representation or in
industries monopolized by one major player. The ability to change is thus required
due to lack of available alternatives. (Bliemel 1998, 37-44.)
 16

3.7 Advantages of customer retention strategy

Herrmann A (2000, 51-52) stated that in the tough, tooth and nail competition, the
companies that have managed in the past to closely bind their customers to them-
selves, thereby protecting customers against competitor attempts to attraction them
away, have the advantage. The mutual acceptance grows as the duration of the busi-
ness relationship grows. The customers will continue to trust their regular supplier if
that supplier has an unsatisfactory service. This kind of relationship bond remains if
the large number of interactions with long time relationships between business part-
ners entails. The intensive situation of working together leads, among other things, to
a strong mutual interest to share information and make complaints. The customers can
reveal their observations concerning product quality and share their opinion and an-
noyances, as to improve, all of which serves as a basis for an innovative form of ser-
vices. Customer retention can strengthen the security of the manufacturer; reduce vari-
ous risks like the fear of failure. When the company knows the needs of their cus-
tomer well, production risks are also determined and can be reduced. Closely con-
nected with this is a lower investment risk, once management has more dynamically
concentrated its policies of innovation on the requirements of the sales market. Com-
panies customer relationships, as a rule, also bring with them improved benefits in the
area of expenditures. With increasing customer trust, there is also a growing willing-
ness to refer to the company and the tendency to recommend it. A phenomenon gener-
ally known as word of mouth advertising experienced as more believable when it is
not seen as being influenced by the company. The relationship between the customer
retention and commercial success of a company has a positive impact. Profit per con-
sumer increases with the increasing customer relationship duration, as the duration of
a customer relationship increases the firm experiences less costs associated with find-
ing replacement customers. The higher the percentage of the customer relationship of
firm the higher the bottom-line profit potential.

3.8 Factors of customer retention profitability

There are different factors, which influence the customer retention profitability like
product, price, communication, distribution, customer clubs, customer cards, com-
plaint
 17

Management, the input procedure, the case processing procedure and information col-
lection procedure. Customer retention can be achieved in various ways with the qual-
ity services provided to the customers and giving more priority to the existing profita-
ble customers. In Figures 5 and 6 show the relationship between customer commit-
ment and company success, according to the example of a credit card company and a
garage. Where both accounts the profitability grows with the increase of the business
relationship`s duration. (Raab 2008, 84.)

Figure 5. Credit card company (Raab 2008, 84)

Figure 6 Garage company (Raab 2008, 84)

 18

Product
The quality of the product can attract customer for example through a product devel-
opment process shared by the customer and the provider. The essential fulfilment is
thereby achieved in that jointly developed product achieves the customers’ expecta-
tions. Furthermore, the customer is strongly integrated through the development pro-
cess, getting to personally know the company contact and therefore develops an emo-
tional connection. Therefore, quality standards, designs, and additional product ser-
vices can also contribute to customer commitment. (Raab 2008, 84-89.)

Price
Price is the key element in the reaching the customer satisfied. Price plays and im-
portant role in the functioning of economic system. Giving discount and bonus on pur-
chasing will attract customers towards the products. Customers can also be made loyal
by satisfaction dependent pricing systems and money back guarantees in case of dis-
satisfaction. In this case, special contracts and standard customers pay different prices,
which are graded according to purchase quantity. A potential customer, who is
granted better conditions with the growing length of the business relationship or with
increased purchase quantity, will carefully consider whether they will choose another
supplier, and thereby pay with this benefit. On the other hand, possibility consists of
contracts that vary in the level of basic amounts and in price per unit. (Rowley, 2006)

Communication
The continuous communication with the customer should lead to an increase in the
customer’s loyalty to the company. Classic elements here include personal contacts
with the customers in the form of customer’s forums, field service, direct mailing ef-
forts, telephone contact and complaint management system. Companies are more ac-
tive using the internet, email and voice over IP technology. For example, the internet
based company; Amozon.com has recently got success in achieving repeat purchases
by tracking not only what individual customer purchases, but also what other custom-
ers who also purchased the same item have purchased in the past. Through email com-
munication, customers of Amozon.com can view similar items based on purchases
made by other customers. If customer has an interest in a certain topic, certain form of
music or certain hobby reviewing items of interest as determined by Amozon.com can
 19

be very helpful. If there is lack of such communication efforts, then customers may
choose their purchasing requirement elsewhere. (Raab 2008, 84-89.)

Distribution
The standard modes of distribution are commerce, catalogues sales, direct delivery
and subscriptions. The sales product over the Internet is also becoming increasingly
more important. The emails sent to customers detailing similar items of interest often
act as customized sales catalogues for the seller.

Figure 7. Tools of customer commitment (Raab 2008, 86)

Figure 6 shows various tools of customer commitment in an overview format. Which

tools should be implemented depends on the individual goals of a company. A com-
pany has to decide to choose a specific primary effects itself whether it wants to con-
 20

centrate on interacting with the customers, the satisfaction of customers, or on the bar-
riers of change. On the other hand, maybe a combination of all of the above is also
beneficial. According to Raab (2008, 84-90), the three tools of customer commitment
that have been gaining steadily in significance recently will be is discussed in detail:
customer cards, customer clubs and professional complaint management.

Customer clubs
The customer club is an organization of the customers who are offered special ser-
vices because of their membership. Interested customers can join these clubs on a vol-
untary basis. Special services can include up to date information, payment options and
the entitlement to special services, attract offers and private event. A company can at-
tempt to offer a membership with extra value to suggest exclusivity or additional ben-
efit. Customer clubs can be divided into closed and open club groups. Open clubs are
freely accessible to everyone or to all customers whereas in closed clubs there are lim-
itations, such as membership fees. Not every customer can afford or want to pay these
fees. Therefore, it is possible to specifically evaluate members and target groups. The
customer club service centre is the hotline of the club. This hotline caters to the needs
of the customers and, at the same time, maintains the customer databank.(Raab 2008,
89.)

Customer cards
The success of customer cards depends on the function and services offered, which
should benefit the customer. Customer cards have over time evolved from their origi-
nal function as a means of payment into a marketing tool. Companies attempt to bind
the customer to them with original service offers and systems of discount. Whether
department stores, supermarkets or gas stations, many companies are currently at-
tempting to entice with varying forms of customer cards. Whoever owns one can ob-
tain, for example, a special price, advantages, trust and bonus points as well as credit.
Through offering special services, companies validate the feeling of being a regular
customer thus encouraging the customer to take the companies more seriously. The
consumer is personally addressed, receives offers only for cardholders and can see
himself or herself as being a valued company patron. With customer cards, the fre-
quency of visits increased and, on average, a rise in the quantity of purchases is ob-
served. (Raab 2008, 84-90.)
 21

There are various kinds of customer cards, customer cards without a payment func-
tion, cards with revolving credit, cards with a bonus function and customer cards with
a discount function.

Five customer cards and their functions are compared below.

Figure 8. Comparison of customer cards (Raab 2008, 89)

Complaint management
Customer management motto `do it right the first time` enjoy an advantaged place,
complete satisfaction of all customer wishes is not always assured and possible mis-
takes in the adaptation of services may not be omitted. Effective complaint manage-
ment should therefore be seen as an important tool. Customers invariably complain
when they are not satisfied with the service received or with individual elements of
the service. The motive because of all complaints is accordingly the disappointment of
expectation that have been experienced concerning a product or service. The service
 22

received does not add up the customer’s personal wishes. Therefore, the customers
look back to the company, complaints with the hope of solving the problem that has
arisen (Christianus 2002, 71).

Christianus (2002,72-75) mentioned that an active complaint management system

should truly benefit the company, by re-establishing customer satisfaction, through a
handling of the complaint that is as persuasive as possible. In order to assure a profes-
sional way of dealing with complaints, the following three aspects should be consid-
ered,

The input procedure

First the individual customers with dissatisfied should be known by the company. The
task of complaint management is to direct the flow of complaints. The company can
only help the customers who are actively complaining and encourage the silent major-
ity to speak up. One requirement to ensure participation by the silent majority is lack
of difficulties associated with the filing of a complaint. The suggestion boxes or other
methods of collecting complaints should be checked frequently, so that the dissatisfac-
tion can be determined as soon as possible.

The case processing procedure

This procedure involves the quick and inflexible processing of customer complaints
with the goal of remedying the customers concerns in the way that is convincing to the
customers. Whether regaining of the customers satisfaction is successful is decided in
the context of the case processing procedure. A company can only truly win back
those customers who receive a solution to their problem that in their eyes is convinc-
ing. In this instance, the social competence of customer contact personnel is im-
portant, since handling with the highly emotional conflict situation may often be re-
quired.

This procedure involves checking, the complainants are questioned concerning satis-
faction with how the process of dealing with their complaint went, as well as how to
 23

satisfy the customer by solving the problems. Moreover, meeting the needs of dissatis-
fied customer as so as possible.

Information collection procedure

The information collection procedure consist of acquiring information that can be

used for the future improvement to the process integral to the rendering of Services
and relevant individual features of services. With the basis of an exhaustive analysis
of customer complaints, a company can discover what particular weak point and prob-
lem areas with the services provided.

3.9 Customer retention as a key to business performance

Customer retention has more impact on profit than market share, economies of scale
and other variables that are considered to provide complete advantages for a firm.
While acquisition strategies are necessary to fill the pipeline with customers to coun-
ter inevitable attrition, it should be remembered that customer equity is more depend-
ent on customer retention than customer acquisition. For most firms, improving cus-
tomer retention can lead to very significant increases in profitability. Customer reten-
tion strategies work best when industry retention levels are high and there is a signifi-
cant step in the company`s customer base. Only five percent increase in retention can
increase a company’s profitability to over 85 percent. Customer retention strategies
are profitable not only because of the increased revenue from loyal customers but
also, because of the reduced costs of serving long-time customers. A customer reten-
tion strategy is based on two types of bonds, programmatic and humanistic. Program-
matic bonds consist of rewards programs (priority treatment with regard to notice of
sales and events, tickets, invitations, free merchandise, etc.), and procedures that make
it difficult for customers to switch the provider’s termination penalties, lengthy forms
to complete, and a lengthy time involved etc. Humanities bonds refer to the treatment
given to customers by highly trained personnel. E- Marketing through (email and
newsletter) and social networking have become two of the most cost effective ways to
retain customers and gain a greater share of wallet. Companies can also develop com-
puterized systems that can personalize offering and tailoring products and services to
specific customers. Recommendations can be made based on the buyers’ purchase his-
tory and history of buyers similar to them. For dealing with customer complaints and
 24

problem resolutions, customer contact personnel can be trained to provide outcomes

for customers based on their company value. After viewing a customer´s value profile,
they can choose to accommodate a high value to customers. (Baran & Galka 2013,
230-243.)

3.10 Creating Trust to build customer retention

Trust is the medium to connect one party`s confidence with the other relationship
member`s reliablity, durability and integrity and the belief that its actions are the best
interest of prducing positive outcomes for the trusting party. Trust plays a important
role to retain profitable existing customers. Trust is an indispensable component of a
healthy, growing relationship between a company and its customer. The customer`s
own level of commitment to his relationship with a company build long term trust. It
Enterprises create trust-based customer relationship through the actions of their
employee and partners, and through company strategies and policies to keep exsiting
customers. (Rogers 2004, 43-44. )

In service company customers have to go through the consumption or delivery process

in order to learn about the product, this represent a big risk that the reputation of the
service provider has significant bearing on purchase decisions. To enhance trust firm
should really listen to customers feedback and try to give immedate reactions,infrom
customer about the risk and problems of different services. Trust brings positive word
of mouth and number of operational benefits to a given service encounter. Hence,
building trust to retain customer is profitable to a company. (Chase 2013, 67,87. )

3.11 Impact of life time value customer on customer retention

Companies want to be responsive by keeping open dialogue with their customers by
adapting customer retention approach like effective programs for receving and re-
sponding to complaints, active solicitation and analysis of customer satisfaction data,
and the development of long-term strategic relationship with customers by evolving
changing needs. When dealing with customer a company must consider lifetime value
of satisfied customer rather than individual profit gained transaction customer. As life
time value is not a new concept but it is widely used in consumer goods brand man-
 25

agement, to prevent customer from switching brand because long term customer be-
havior is the key to success, due to cost effective on retention customer than acquire
new ones.

The simple example, to show value of life time value concept. Let’s think a young
person buying his first car but he could not afford the expensive one due to weak fi-
nancial situation. Whereas the dealer profit from selling car will be also less. It is ap-
pealing that this customer is not important. But, some companies realize that this is
not the case. Volvo, for example enhance customer loyalty and repurchase. The young
people who buy an inexpensive Volvo 360 may buy a medium price car Volvo 740 af-
ter several years after increased earning power. Even after several years same cus-
tomer may buy luxury car, Volvo V70. The dealer profit increase over time, as the
customer becomes more establish financially. The future purchases customer is appar-
ently worth, based on the current purchases. Hence, life time value customer should
be retained because it is cheap to retained existing customer than acquire new cus-
tomer, customer satisfaction should be used to enhance and develop relationship with
life time value customers, and retaining existing customer are profitable. (Leventhal
2006, 434-435.)

3.12 Key performance indicators of customer retention

programmes
A company should focus on the sales and profit adjusted retention rates in each
customer segments, calculating the cost for customer retention and the cost for
obtaining new customers. Unprocessed retention rate should be focused on the
company, in each customer segment,towards the sales-adjusted retention rate and
profit adjusted retention rate. Customer retention plays an important role allowing to
know the amount of business a company gets through a specific retained customer,
customer churn rate per channel and the cost effictiveness of the customer retention
strategy (Buttle 2004, 319).

A dissastisfied customer is expensive, and it costs five times more to get new
customer than retain a current one. For example, one customer who spends 100 euro
 26

per week stops doing business with a company, which will lose 1 euro million in
annual revenues. Retaining existing satisfied customers will generate the medium of
word of mouth and repurchasing the company`s products and services, which, on the
other hand, is benificial for the company’s indirect marketing and financial benefits.
(Petouhoff 2002, 11-15).
 27

4 Methods and materials

Research design can be classified into three categories: exploratory, descriptive and
explanatory studies. The exploratory case studies show an initial study in advance of
wide-scale surveys to map out the themes for successive research. Descriptive re-
search is usually used to expand on the trends that have already been discovered by
survey research. In addition, explanatory research helps to seek to derive a detailed
understanding of a particular phenomenon. (Lee, 2007.)

The research will mainly, focus on how the service providing company Amica restau-
rant of Valmet Oy Ltd. can improve their customer retention by constantly developing
their business strategy. This includes the assessment of certain variables such as cus-
tomer relationship management, relationship marketing and influence of customer re-
tention strategy. Exploratory research was used, in order to gain a better understating
of the research area. Hence, the research purpose is explanatory by drawing conclu-
sions that answer the research questions.

4.1 Data collection

A qualitative research approach was chosen due to the small number of potential par-
ticipants. Quantitative research would have required many more respondents in order
to get reliable data. The primary data was collected by using semi-structured methods
in by interviewing the participants. The interviews were conducted via e-mail. An
email interview allows a flexible time period for the respondent and interviewee,
where the interview can be conducted over an extended period of weeks or months. (
Mark Saunders, 2009, 349-351.) The case company was choosen due to the personel
working experience in the amica restaurant. The interview request was send via email.
In order to conduct the research interview, the first interview was requested by send-
ing an email to the director of the Amica restaurant of Valmet. The author got a reply
from the director of the company and the recommendation to contact the manager of
the restaurant. After that, the author emailed the manager of the company and agreed
on a personal face-to-face meeting to further discuss the thesis topic and research ob-
jectives and added value for the company. The author prepared beforehand for related
research questions.
 28

The author and the manager agreed to meet on January 21st 2015 at 4 pm . At the per-
sonal meeting with the manager; the author explained the thesis topic and asked the
manager whether he could perform the interview method to collect data. The manger
allowed the researcher to interview another employee of the Amica restaurant by
email as the schedule of the manager and the workers were very tight, and it would
take a longer time and be difficult to arrange a face to face interview. The manager
forwarded the author`s research questions to the other employee.

The researcher translated the research questions into Finnish in order to get more re-
spondents. The interview was conducted with four employees of the Amica restaurant.
The interview questions both in Finnish and English languages were sent through
email. At first, there were just two respondents to participate in the research. It was
quite difficult to derive reliable data just from two respondents. Nevertheless, after
discussing with the tutor and the manager of the amica restaurant, the author decided
to send those questions in Finnish as the two other participants felt much more com-
fortable to answer the questions in their native language. The author had difficulties
with translating those questions into Finnish but with the help of an online dictionary
i.e. a English-Finnish dictionary, and with the help of Finnish friends, the questions
were translated into English. The author applied the same procedure in order to trans-
late the answers of the respondents. The secondary data was collected by visiting the
company website and materials provided by the amica restaurant.

4.2 Qualitative research

Qualitative research is an exciting interdisciplinary landscape comprising diverse per-
spectives and practices for generating knowledge. The qualitative approach to re-
search is a unique grounding the position from which to conduct research that fosters
particular ways of asking questions and particular ways of thinking through problems.
The questions asked in this type of research usually begin with words like how, why,
or what. The social meaning people attribute to their experiences, circumstances and
situations, as well as the meaning people embed into texts and other objects, is the fo-
cus of qualitative research. Therefore, at the heart of their work, qualitative research-
ers try to extract meaning from the data obtained. The focus of research is generally
words and texts against numbers. More than a concept or series of techniques that can
 29

simply be employed, qualitative research is an intellectual, creative and rigorous craft

that the practitioner not only learns but also develops through practice. (Leavy &
Nagy, 2011,3-5.) It was said that qualitative research could consist of observation and
participant`s observation, interviews, and researchers own perceptions and impres-
sions. The qualitative research was applied, in order to collect the data from the em-
ployee of the Amica restaurant.

4.3 Interviews
Interview is one of the most powerful ways in which interviewing try to understand
associated humans. It is the medium acquire information to the questions, which in-
cludes a wide variety of forms and range of uses. Depending on the situation, an inter-
view can take place over multiple lengthy sessions or it can take a onetime brief ex-
change. Interview can also take in the form of mailed face to face, group interchange
or self-administrated questionaries’ and telephone surveys. Interview can be struc-
tured, semi structured, or unstructured. In structure interview the interviewer pre-plan
questions and asks all the respondents the same sets of questions. Whereas semi-struc-
ture and unstructured interview are non-standardised, these are usually referred to as
qualitative research. (Fontana, 2007). Unstructured interview are used to explore gen-
eral interested area in depth but in semi- structure interview the researcher has sets of
questions and subject matter which is vary from interview to interview (Mark
Saunders, 2009). Consequently, the interview was semi-structured, as the researcher
allowed the participants to be flexible to respond the research questions. The re-
searcher was not very strict about the questions presented but instead appreciated the
variety in the answers of the respondents.

Due to the busy schedule of the respondents, the interview was held via email because
the interview can be conduct by email a part from one to one interviews conducted
face-to-face basis. The interview questions concentrated on the relationship of cus-
tomer. The interview questions were emailed to four staff members of the restaurant
in both the Finnish and English language. The interview was conducted over an ex-
tended times of weeks so that the respondents have enough time to answer the re-
search questions.
 30

4.4 Data Analysis

According to Yin (2003), research projects should starts with a general analytical
strategy providing the researcher with a system by which he or she can set priorities
for what to study and why. Two general analytical strategies are available when per-
forming a case study, namely relying on theoretical propositions and developing a
case description. Relying on theoretical propositions is favoured strategy and the strat-
egy used in this study. Using this strategy the data collection is based on the research
questions taken from previous studies. The findings of the research will then be com-
pared with the findings from previous studies.

Miles (1994) further state that the process of analysing qualitative data concentrate on
data in forms of words and processing of these words is an aspect of the analysis pro-
cedure. The procedure consists of three activities:

• Data reduction is viewed as the process of selecting simplifying and transform-

ing the data in an arranged; way that conclusion can be drawn and verified.
• Data display refers to the presentation of reduced data in an organised way in
order to simplify the process of drawing conclusions.
• Conclusion drawing is the ultimate analytical where the researcher evaluates
the significance of the finding by noting regularities, explanations, patterns
casual flows and proposition.

When the data in the study were analysed the three steps suggested above were fol-
lowed. The research has been implied conclusion drawing analysis regarding qualita-
tive data within case analysis. First, for each research question included in the study
the empirical findings have been compared to the literature and theories in order to
make with in case analysis and data gained from the case company is compared and
finally drawn conclusions from the data gained from the company.

In e-mail interview data analysis process started before the interviews by dividing the
phenomenon`s different aspects to themes. Therefore, it would simplify the analysis
process after the interviews. Next step was interviewing the respondents, after the in-
terviews, the responses were interpreted word for word. After that, all the answers
 31

were put together and then deleting all unnecessary texts from the text, which did not
have any value on this research. Then it was time to read answers repeatedly to find
out the key issues that was answered by taking notes, mind maps and figures.

Benefits of customer relationship management, analysis

The objective of this question to interviewee is to know how the employee know
about the customer relationship and apply to the company to increase services profit
and value of the company.

After the respondent of the interview, the researcher is happy with the employee of
Amica practice and knowledge about customer relationship management all of the in-
terviewee mention the key point of customer relationship management, which are to
build the future relationship with their customer, to gain customer trust, to fulfil cus-
tomer needs and provide right service in right time. However, no one mention that the
customer relationship management also increase the benefits of the company if author
increase data sample then the result would be different.

The benefits of customer relationship management presented in theory part, page 14,
presents the positive pros. The benefits of customer relationship management is to de-
velop relationship that is more profitable with customers and increased customer satis-
faction.

Advantage of customer retention strategy, analysis

The objective of the questions was to know that how the Amica restaurant can get ad-
vantages of using customer retention strategy and how can company apply customer-
retaining strategy.

Based on the interview questions, the interviewee mentioned that it helps to know the
customers and their needs and able to recommend to right a product which the cus-
tomer will prefer or interest. Able to react for the customer feedback which meet the
expectation of the customer. Customer retention helps to learn about the customer
needs and recommend to existing customer their like services.
 32

As mention in the theory part in page 16 to 21, understanding customer retention is a

system of activities for improving the operation process, on the basis of the positive
positing of the customer because retention strategy work best when the company re-
tention level is high because only 5 percent increase in the customer retention can in-
crease company profitable to over 85 percent.

Customer retention strategy as the key to their business performance, analysis

The objective of the question was to know how Amica restaurant of Valmet oy apply
customer retention strategy as the key to their business performance.

After the respond of the interview, the researcher agreed with the employee of Amica.
The practice and knowledge about customer retention strategy they apply as the key to
their business performance all of the interviewee mentioned the key point of customer
retention strategy responsibility of the employee by giving training to the employee,
respecting working environment, employee should fulfil the responsibility, introduc-
ing to his/her job, good guidelines, training and bonus. Towards the attitude of the em-
ployee the respondent mention that there should be yearly appraisal, daily meetings
(morning and evening),employee should ask the question that are not clear during
working environment, asking feedback from the managers from previous working day
and same day. The employee's positive attitude really matter because if customer ser-
vice is generally positive client is in good spirits and satisfied. Positive attitude is sig-
nificant. Towards evaluation of customer relationship the respondents mention the
yearly customer satisfaction survey should be done, head secretary meeting should be
done at least once in a month. And reacting to the customer feedback, held the conver-
sation between the customer and company management team. Towards the change of
performance if needed the respondent mention that they do it several times like by
changing the products. The company is ready to accept the changes in the perfor-
mance if needed. By reacting on time according to the program of the company. The
company has a meeting with the customers at regular intervals, and if there is, a prob-
lem comes up activities to change. The change must be ready at all times. To behave
with the different types of the customers respondents mention that Amica restaurant
have three different kind restaurant in the valmet area and restaurant prepare different
kinds of foods for different customers. There are differences, and the differences must
 33

be also aware of different customers and exercise in favour of customers. To the train-
ing of the employee the respondent, mention that they have lot of training from cus-
tomer service to serve or make food and how to garnish food. The employee should be
educated and the education should be arranged from time to time and the development
of the employee should be checked and followed. The training of the employee is very
important. However, the employee should also be active enough to update themselves
by learning and reading things that are related to their work.

The customer retention strategy as a key to business performance mentioned page 25

& 26, customer retention has more impact on profit than market share, economic of
scale and other variable that are considered to provide complete advantages for a firm.
Customer retention strategy are not only profitable because of increased revenue from
loyal customers also because of reduced costs of serving long time customers.

4.5 Reliability and Validity

Validity is a process whereby the researcher earns the confidence of the reader that he
or she has gotten it right. Trustworthiness takes the place of truth. Validity takes the
form of subjecting one`s findings to competing claims and interpretations and provid-
ing the reader with a strong argument for particular knowledge. (Leavy & Nagy,
2011)

The interviews were designed to increase validity to compare the findings, which
hopefully lead to a better analysis. The interview questions were planned to provide
relevant data. In this research, validity is used in the evaluation of the questions. Logi-
cally, the nature of the questions asked is critical to the reliability and validity of an
interview. If the questions are not related to the issues to be examined, we should not
expect the results of the research necessarily to be comparable because each inter-
viewer has, in fact, collected different information about the interviewees. Validity is
properly implemented if the target group and the questions are accurate. The assess-
ment of validity usually directs the attention on the question of how well the research
approach and methods used correspond to the phenomenon, which is to be examined.
The author constructed the questions that would give a basis for positioning the com-
pany and evaluating its input to customer relationship management. The author got
 34

straightforward answers to direct questions, which contributed to reaching validity.

From the answers to the questions, the author got a basis to continue the research and,
in addition, they supported the author’s original thoughts about the issues considering
customer relationship management and customer retention. Naturally, it gave a deeper
insight into the process.The author used their original ideas on each question and an-
swer and based on the new information gained in the analysis. The author strived for a
natural continuum each time findings were made so that there would be conformity
throughout the research.

Validity is concerned with the generalisability of the research, whether it can be ap-
plied to other research settings. This is a great concern when dealing with single case
studies as the results usually only reflect that organization. With an increased number
of cases studied, this problem is reduced. (Saunders, Lewis, & Thronhill, 2009, 158).

The reliability of a research is assured by similarity in the interpretation in further

studies regardless of the interpreter. A questionnaire has to be reliable in order to be
valid. Reliability is, therefore, concerned with the strength of the questionnaire and in
particular, whether or not it will produce consistent findings at different times and un-
der different conditions, such as with different samples or in the case of an interviewer
administering a questionnaire with different interviewees (Saunders, Lewis, &
Thronhill 2009, 373).

In this research, documentation was used in order to collect the secondary data rele-
vant to the study. This was conducted by visiting the websites of the company and
other material provided by the company itself. Consequently, in this research docu-
mentation was the most important measure of reliability. To ensure the highest relia-
bility of the research, the proper questions in the questionnaire were created so that the
respondents would not misunderstand or be misled by the questions. Uncertainty in
the vocabulary and sentence structures was eliminated by a serious consideration to
make sure that the respondents were put in the appropriate context of the questions.
All the questions in the interview questionnaire always support a specific purpose of
the research in which none of the questions give useless information. However, proper
and simple questions also help the respondents save their time and focus on giving the
most honest answers.
 35

5 Findings

The research questions sent via email are included in the Appendices. According to
the respondents, the advantages of customer relationship management are mentioned
such that it helps to know what their customers really want and with the help of this
knowledge, the restaurant can provide the right service at the right time for the cus-
tomers. It helps to build a future relationship with the customers. Both the customers
and the company can have mutual advantages, when both parties know each other`s
needs and desires. To create customer retention, the model of Porras i.e. by Christo-
pher, Payne and Ballantyne was used. The strategy applied to build the customer rela-
tionship can be summarized as communicating with the customers, arranging cus-
tomer group meetings four times a year, surveying once a year, collecting customer
feedback and keeping in mind that face-to-face communication is important. They ap-
ply different marketing plans to surprise customers by providing discounts on the food
prices on special occasions. Recently, changes have been made to the customer rela-
tionship but the changes have not been mentioned due to confidentiality. The changes
are made after a brief discussion with the customers on necessity of any changes.The
communication channels that were employed to reach customers were info walls, in-
ternet, e-mails, group meeting, feedback book and telephone, survey of the customer
satisfactory, meetings with the customers, secretory meeting, collecting feedback and
e-mails from the customers. They mentioned that they have different types of custom-
ers with different tastes and desires.

As for the question how the company can get advantage from using a retention strat-
egy, the respondent answered that it helps to know the customers and their needs,
which allows to recommend right products to the right customers. It helps to correct
weak point through customer’s feedback which meet the expectation of the customer.
Customer retention makes it easier to learn about the customer needs.

As for the question how Companies can apply a customer retention strategy as a key
to their business performance, the respondent answered that the responsibility of the
employee would increase, employee will focus to their specific job position to per-
 36

form better, company can provide good guidelines, training and bonus to the em-
ployee, which would correct the attitude of the employee by a yearly performance ap-
praisal, daily meetings and managing the feedback of customers. A customer relation-
ship is evaluated by arranging a customer satisfaction survey yearly and secretary
meeting about every second month. The firm have made many changes to promote
customer service by changing in products and the way they train the employee. As for
the attitude of the employee, Respondent mentioned that there should be a yearly ap-
praisal, daily meetings (morning and evening), and employee work evaluation. The
employee's positive attitude really matters because if customer service is generally
positive, the client will be satisfied. A positive attitude is significant. As for the evalu-
ation of customer relationship, the respondents mentioned that yearly customer satis-
faction survey should be made secretary meeting should be arranged at least once a
month. Reacting to the customer feedback, conversation between the customer and
company management team to increase customer touch point. As for the change of
performance within the company if needed the respondent mention that they do it sev-
eral times like by changing the products, the company is ready to accept the changes
in their performance if needed and by reacting to customer feedback solutions on time
according to the program of the company. The company have a positive thought with
the customers at regular intervals, and if there is, a problem comes up activities to
change. To serve different types of the customers, the respondents mentioned that the
Amica restaurant have three different kinds of restaurants in the Valmet area and these
restaurants prepare different kinds of meals for different customers. There are differ-
ences, and the differences must be also aware of different customers and exercise in
favour of customers. As for the training of the employees, the respondents mentioned
that they have a lot of training in customer service for their employee on serving food
and garnish food. The employee should be educated and the education should be ar-
ranged from time to time, and the development of the employee should be checked
and followed. The employees should also be active enough to update themselves by
learning and reading things that are related to their work.
 37

6 Discussion

6.1 Research Results

The research questions presented in the chapter 1 presented the solid base for the re-
search. The outline of the survey together with the supporting literature revealed, in
the case of Amica restaurant of Valmet Oy, that there is a demand for customer rela-
tionship management and increase customer retention strategy that it is relevant for
successful business operations presently at marketing relationship and possibly be
even more in the future. The strategy will not only increase the company`s business
performance, but can also save money in terms of time and marketing cost for acquir-
ing new customers rather than focusing on existing customers. When focusing on the
customer retention rate is equivalent to a low defection rate. Customer retention is the
mirror image of customer defection rate. Proper process for customer feedback, com-
plaint management, front staff training, special bonus and offers to customers will in-
crease the business performance, which is an improvement for the employee-working
environment. As the more satisfied customers, a better public image will be presented
to them and more value will be created for the business.

Customer`s level of commitment was more dependent on employees` personalities

than on the efforts of leadership. Customers plays a vital role in the business perfor-
mance to leads towards the success. The satisfied customers helps indirectly in promo-
tional activity to attract the new customers with words of mouth communication chan-
nel.

6.2 Research Analysis

 Interview

An interview was done to increase the understanding of customer relationship man-

agement by investigating the service company and their relationship with customer to
increase customer retention. The food service company was chosen because they deal
 38

with the customers all the time serving foods. By limiting population to existing part-
ners, the validity of the research results may be compromised and at the same time
limited in two ways:

1. The respondents are already in the cooperation with the Amica restaurant, so
they had already formed an opinion about the company; this may have caused
a response bias such that the respondents answered in the way in which they
thought the interviewer wanted them to, or in the way, they thought was most
relevant.
2. Some of the company`s representative did not know about Customer relation-
ship management and customer retention strategy, while others already had the
system in the operation. This might have affected their responses even though
the basic of customer relationship management and customer retention strategy
were explained in the interview.

The questionnaire, however, is repeatable and as a tool for research, it gave relia-
ble information even though there was minor threats to its validity. To increase the
understating about the customer relationship management and customer retention
the results of this survey can be compared.

 Research Purpose

Customer relationship management and retention strategy is not a new field of study
and there are already many researches done before. Many papers available on cus-
tomer relationship management system applied. In this research, however, the rela-
tionship between the service company and their customers to increase customer reten-
tion strategy are under close study. The research scope was set only to increase the un-
derstanding of service providing company and relation of customer to increase cus-
tomer retention.

The author investigate the company relationship with their customer and focus more
on customer retention strategy. So that the company can improve their relationship,
more on the existing customers rather than spending lot of money for acquiring new
customers.
 39

6.3 Reflections on the Research

During the research, the author gained a lot of new informations regarding customer
relationship management and customer retention strategy, which increase his skill
level towards that the subject area.the researcher learned about how amica restaurant
of valmet oy applies customer retention strategy to keep their existing customers and
what they do to keep in touch with their customers. During the research interview, re-
spond author got some feedback from the respondent that the questions were more re-
lated to the field of strategic management that is rarely used in the level of working
place and questions were meant mainly for operative management. The author got
chance to know his drawbacks and gained recommend to make questions more sys-
tematic to get answer to the research questions.

6.4 Reliability and Validity

The interview was designed to increase validity in the form of comparing the findings,
which hopefully lead to a better analysis. The interview questions were planned to
provide relevant data. In this research, validity is used in the evaluation of the ques-
tions. Logically, the nature of the questions asked is critical to the reliability and va-
lidity of an interview. If the questions are not related to the issues to be examined,
there should not be expectation on the results of the research necessarily to be compa-
rable because each interviewer has different information about the interviewees. Va-
lidity is properly implemented and the target group and the questions are accurate.
The assessment of validity usually directs the attention on the question of how well
the research approach and methods used correspond to the phenomenon that is to be
examined. The author constructed the questions that would give a basis for the posi-
tioning of the company and evaluating its input to customer relationship management.
The author got straightforward answers to direct questions and this contributed in
reaching validity. From the answers to the questions the author got a basis to continue
the research and in addition, they noted that answers supported author’s original
thoughts about the issues considering customer relationship management and cus-
tomer retention. Naturally, it gave deeper insight into the process. Author used their
original ideas on each question and answer and based on the new information gained
analysing was done. The author strived for natural continuum each time findings were
 40

made so that there would be conformity throughout the research. It is great concern of
validity when dealing with single case studies because the result usually only reflects
that organization. However, with the increased number of cases studies the problem is
reduced.

To ensure the highest reliability of the research, the proper questions in the question-
naire were created so that the respondents would not misunderstand or be misled by
the questions. Uncertainty in the vocabulary and sentence structures was eliminated
by a serious consideration to make sure that the respondents were put in the appropri-
ate context of the questions. All the questions in the interview questionnaire always
support a specific purpose of the research in which none of the questions give useless
information. However, proper and simple questions also help the respondents save
their time and focus on giving the most honest answers. Accurate recording, transcrip-
tion and documentation of all research data and process insured the reliability of this
study.
 41

7 Conclusion

The aim of the thesis was to increase the understanding of customer retention by in-
vestigating a service company, which can improve their customer retention through
customer relationship management. Companies may choose to apply different parts of
customer relationship management to their businesses through technology and other
means of communication with their customers, various training programs and other
resources devoted towards the employees of the company. Evaluating the past and
present behaviour makes it possible for the company to adopt the most effective busi-
ness strategy.

Customer retention strategy helps a company to gain profit because only five percent
of the existing customers can lead the company towards 85 percent of the gross profit.
Customer retention is the mirror image of customer defection rate. A proper process
for customer feedback, complaint management, front staff training, special bonus and
offers to customers will increase the business performance, which is an improvement
to the employee-working environment. The more satisfied the customers, are the bet-
ter public image will be presented to them and more value will be created for the busi-
ness.

An interview was done to increase the understanding of customer relationship man-

agement by investigating the service company and their relationship with customers to
increase customer retention. A food service company was chosen because they deal
with the customers all the time serving food. Customer relationship management and
retention strategy are not new fields of study, and there are already many previous re-
searches.

One of the respondents gave some feedback saying that the questions asked during the
research process were more related to the field of strategic management. The author
got a chance to know his drawbacks. The interview was designed to increase validity
in the form of comparing the findings, which hopefully lead to a better analysis. The
interview questions were planned to provide relevant data. Validity is properly imple-
mented if the target group and the questions are accurate. The assessment of validity
usually directs the attention on the question of how well the research approach and
 42

methods used correspond to the phenomenon, which is to be examined. The author

constructed the questions that would give a basis for positioning the company and
evaluating its input to customer relationship management. The author got straight for-
ward answers to direct questions,which contributed to reaching validity. The answer
mentioned of the respondents additionally increased the validity of the research.

Documentation was the most important measure of reliability. To ensure the highest
reliability of the research, the proper questions in the questionnaire were created so
that the respondents would not misunderstand or be misled by the questions. Uncer-
tainty in the vocabulary and sentence structures was eliminated by a serious consider-
ation to make sure that the respondents were put in the appropriate context of the
questions.

The conclusions are that companies have to realize that they have to do things right by
listening to their customers and adopting a strategy based on mutual understanding
with customers. The company has a better chance to overcome their competitors and
be more efficient in building relationships with their customers by promoting cus-
tomer retention.

7.1 Suggestions for further studies

This research focused on investigating the relationship between a service providing
company and their relationships with the customers to increase customer retention.
The study dealt with one firm within the food service sector. Further research related
to the thesis topic would be of interest for professional service firms in other indus-
tries. Therefore, the topic would be good in further research on the service company to
analyse the company’s customer relationship management and success factors.
 43

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Appendices

Appendix 1: Interview questions

1) What are the advantage of customer relation management?
What strategy applied to build customer relationship?
Are there any changes lately towards customer and customer relationship?
Communication channels?
Customer reaction?
2) How can the company get advantage from using retention strategy?
Customer satisfaction within the company?
Retaining existing customer?
What are customer real needs?
Advantage with retaining customer?
3) How can company apply customer retention strategy as the key to their
business performance?
Responsibility of the employee?
Attitude of the employee?
Evaluation of customer relationship?
Change of performance if needed?
Differences when it comes to behave with different types of customers?
Training of the employee?

Appendix 2: Interview questions

1. Mitkä ovat asiakkuudenhallinnan hyödyt?
Mitä strategiaa käytetään asiakkuuksien luomiseen?
Onko tapahtunut muutoksia asiakasta kohtaan ja asiakassuhteesa?
Kommunikaatiokanavat?
Asiakasreagointi?
2. Kuinka yhtiö voi käyttää edukseen säilyttämisstrategiaa?
Asiakastyytyväisys yrityksen sisällä?
Jo olemassa olevien?
Mitkä ovat asiakkaan oikeat tarpeet?
 47

Hyöty palaavien asiakkaiden kanssa?

3. Kuinka yhtiö voi hyödyntää asiakkaidensäilytysstrategiaa liiketoimin-
tansa avaimena?
Työntekijän vastuullisus?
Työntekijän asenne?
Asiakkuuden arviointi?
Toiminnan muuttaminen jos tarpeen?
Erot käyttäytymisessä erilaisten asiakkaiden kanssa?
Työntekijän koulutus?

Appendix 3: Interview request send to participants via e-mail

In English
Dear Mr.##/Mrs.##
My name is Nischal CK and I am studying facility management in Jyvaskyla
University of Applied Sciences

At the moment I am writing my Bachelor`s Thesis on the topic: “Customer re-

lationship management and customer retention in service company”. My re-
search will be based on interviews. These interviews are conducted for re-
search purposes, to know the better understanding of company customer rela-
tionship.

I think your opinion and personal views would be very valuable for my re-
search. Would you kindly give me the opportunity to interview with your com-
pany staff member via email?
Thank you already for your time!

Sincerely,
Nischal Ck